Mozambique's TotalEnergies LNG Project Resumption: A Strategic Energy and Infrastructure Investment Opportunity in a High-Growth Emerging Market

The resumption of TotalEnergies' $20 billion Mozambique LNG project in 2025 represents a pivotal moment in Africa's energy landscape and a high-conviction investment thesis for long-term capital growth. As the project edges closer to full operationalization, it sits at the intersection of geopolitical recalibration, security stabilization, and a global energy transition that demands both caution and strategic foresight.

Geopolitical Catalysts: Regional Stability and International Partnerships

Mozambique's Cabo Delgado province, home to the Afungi LNG site, has long been a flashpoint for Islamist insurgency linked to the Islamic State. By 2021, the conflict had forced a project suspension, triggering a force majeure and halting $20 billion in investments. However, recent developments signal a turning point. Regional alliances, including military support from Rwanda and South Africa, have significantly reduced insurgent activity. President Daniel Chapo's government has also prioritized infrastructure development and security coordination, creating a more conducive environment for foreign investment.

The U.S. Export-Import Bank's $5 billion loan in March 2025—part of a $14.9 billion debt package—underscores international confidence in the project's strategic value. This financing, coupled with TotalEnergies' collaboration with local and regional partners, positions the project as a linchpin for Mozambique's economic diversification. Yet, geopolitical risks persist. The UK and Netherlands remain hesitant to approve an additional $7 billion in loans, citing concerns over human rights and climate commitments. Investors must monitor these approvals, as delays could strain TotalEnergies' balance sheet and delay project timelines.

Security: A Delicate Balance

Despite improved security conditions, the Afungi site remains vulnerable. In 2025, 26 insurgent incidents were recorded in the Meluco district, up from 16 in 2024. TotalEnergies has deployed private security forces and partnered with Mozambican troops, but allegations of human rights abuses by local security forces—investigated by the Mozambican Commission on Human Rights—pose reputational and legal risks. A single large-scale attack could disrupt operations, inflate costs, or trigger regulatory scrutiny from export credit agencies.

The company's response to these challenges is critical. TotalEnergies has pledged to offset the project's 10 million tonnes/year CO₂ emissions via carbon capture and to engage local communities. However, environmental activists and watchdogs remain skeptical. For investors, the key is to assess whether TotalEnergies can maintain social license to operate while addressing community grievances, including land displacement and compensation disputes.

Financial and Market Dynamics: High Rewards, High Risks

The Mozambique LNG project is projected to deliver 43 million tonnes of LNG annually by 2029, making it Africa's largest facility. At full capacity, it could supply 5–7% of the continent's LNG output, targeting high-demand markets in Asia and the Middle East. A scenario analysis by TotalEnergies reveals strong returns: a 26.15% internal rate of return (IRR) in best-case LNG price scenarios and 16% in worst-case conditions.

However, the global LNG market is evolving. The Institute for Energy Economics and Financial Analysis (IEEFA) warns of an impending oversupply by 2026, driven by new capacity in the U.S., Qatar, and Russia. This could depress prices and reduce profitability for projects like Mozambique's. Additionally, the UK's potential withdrawal of its $1.15 billion commitment—aligned with its net-zero goals—highlights the growing tension between fossil fuel investments and climate policy.

Strategic Implications for Investors

The Mozambique LNG project offers a compelling, albeit risky, investment opportunity. Its success hinges on three pillars:
1. Geopolitical and Security Stability: Continued regional cooperation and effective counterinsurgency efforts are non-negotiable. Investors should track security reports and military deployments in Cabo Delgado.
2. Financing Certainty: The finalization of UK and Dutch export credit loans by Q4 2025 is critical. Delays could force TotalEnergies to seek higher-cost financing or renegotiate terms.
3. Market Conditions: LNG demand growth in Asia and Europe will determine the project's long-term profitability. A shift toward renewables or pipeline gas in key markets could render the project a stranded asset.

For those with a long-term horizon, the project's potential to reshape global LNG supply chains and Mozambique's economy is undeniable. However, investors must hedge against volatility by diversifying exposure—perhaps through LNG ETFs or TotalEnergies' broader energy portfolio, which includes renewables and petrochemicals.

Conclusion: A Calculated Bet on Africa's Energy Future

TotalEnergies' Mozambique LNG project is a high-stakes gamble with the potential to deliver outsized returns. The resumption of construction in 2025 marks a significant milestone, but success depends on navigating a complex web of security, geopolitical, and market risks. For investors willing to accept these challenges, the project offers a unique opportunity to capitalize on Africa's energy renaissance. However, caution is warranted: the path to profitability is fraught with uncertainties, and the coming 12–18 months will be critical in determining whether this $20 billion venture becomes a strategic win or a costly lesson in energy transition.

The next phase of the project—finalizing financing, securing security, and aligning with global climate goals—will define its legacy. For now, the LNG market watches closely, poised to react to every development in Cabo Delgado.